Member Info for WiganWarriors

Just for clarity, I’m a long term Wimps holder ( purchased core holding around eleven years ago). I also regularly trade Wimps via SB , which proves rewarding if you have patience to exploit the regular swings.

As for a quality builder, Redrow would be my choice. Their developments are usually a step above the other listed builders.

Well, PBV was always used as a benchmark metric to compare and “value” builders in the bad old days when they used to load up on debt to buy land, build out developments completely and then try to sell them as they move on to the next development.

Today, I think operating margin is a better measure given the current operating practices, which leads to better WIP management and consequently improved FCF

These days builders in general operate on a much more sensible build to order basis, we’re they are able to quickly adjust actual product for sale with market demand. This way they don’t get caught with too much unsaleable stock if market demand falls. Of course some are better than others at this.

Also, as pointed out on this thread, PSN have by far the best operating margin of the major builders. This is because their strategy is to carry a little land as possible, and purchase it as required on a just in time basis. They operate an asset light strategy and target the low cost first time buyer segment. The market perceives this as as superior.

Wimps, on the other hand has the largest strategic land bank of the major builders, providing more certainty for forward earnings. These means that PSN is able to turn the best metrics whilst land is cheap and plentiful, but run the risk of not being able to acquire land at a profitable price, if land becomes scarce. Of course Wimps runs the risk of holding too much land which may need to be written down if the housing market slumps badly.

My final comment relates to special dividends. COVID provided many businesses with a timely excuse to stop paying specials, as they had been over generous and their balance sheets were beginning to look stressed.

Personally, I would prefer that any special shareholder distribution should be a balance of dividends and, or buybacks depending on the situation prevailing. Of course, IMHO.

Well, until Wimps can close at a days high, for a few days, I suspect we will forever sell off any intra day highs. Investing / trading the building sector takes patience ...

The scenario you describe is not uncommon. High expenses and write downs off the top line, leaves "adjusted" earnings much lower.

Jam tomorrow ... see what the market makes of it.

Dili. I can see your a Sage of Omaha follower. Personally, I always thought that Keynes could also generate a pithy aphorism … maybe “the market can stay irrational longer than you can stay solvent…” is one of his truisms :-)

Sorry, I meant to say $1 trillion

Dimi. Well, whilst I myself do lots of analysis prior to buying any shares, and I may wait years before I actually jump onto something I've been following. However, one must always be concious that it is the market that sets the share price, not the result of "traditional" valuation techniques. Increasing these days we see many companies which have valuations (market) which do NOT conform to traditional valuation techniques. Of course, this dislocation is what provides the opportunity to outperform (Alpha) market benchmarks.

Investing is not the game it used to be ... can someone explain why Tesla has a valuation of $1bn ... why game stock hit dizzying heights ... Of course these have nothing to do with analysis and valuation techniques, fashion, algo's, HFT's etc now drive share prices beyond, and below their intrinsic valuations.

Well, I suspect that I am the longest Wimps investor on this BB. I also probably hold more shares than any other investor on this BB. If you have been in Wimps as long as I have you will have noticed that Wimps do not have the market confidence, at least since the 2007 / 8 crash. Many institutional investors are not keen on PR, and what seems like a serial failure to generate value for shareholders.

I still hold, and probably will still hold, but management have to deliver value for shareholders. It's not a case that we have a few years on mediocre performance , just review the last few years (10) and recount managements plans. Much of what has been stated as a strategic plan seems to go quiet after a few years and we move on to the next strategic plan.

Last years cash call Is perceived by many institutional investors as unnecessary, and coincidently got Wimps out of a hole re not having enough small to medium sites which could be up and running quickly, rather than too many large sites which took time to deliver.

Also, COVID got many companies out of the hole of over paying large dividends, and I would include Wimps in this group. Just analyse their free cash flow and you will see the specials could not continue.

Ask yourself why Wimps have underperformed the sector. Why should that be the case.

In case you ask why I still hold, its because of a very large CGT bill, I choose to defer.

I suspect that the institutional investors will start to lose patience with Wimps, as they have generally underperformed the general building sector, which itself has underperformed the wider market. If next weeks trading update fails to reassure, then I suspect it will be a difficult time for management as institutional investors may decide to dump shares just to make their point.

Hopefully management will have something positive to say, and not just current trading. For example, I would like management to consider off loading the Spanish business, as the size and scale has no meaningful impact on Wimps overall balance sheet. Now is probably a good time to sell, as homes in the sun are selling well to the wealthy Europeans and they must be a market for other developers looking to accelerate their presence in Spain. Also, Wimps relied on selling a good proportion of these properties to UK residents, and given our exit from the EU I suspect these numbers will reduce, given reduced residency flexibility and increased administration hassles.

Whilst the proceeds from the Spanish business will not set a light under the share price, they would provide a useful distribution for shareholders, either as a special or share buy back, and show that management are at least trying to proactively generate value and returns for the shareholders.

I would reckon that it should be worth around around two or maybe three times revenue. Given 2019 accounts that is £240m to £360m.

I guess it's a lack of confidence in the managements ability to deliver on the acquisition. Can't see any real appreciation or recovery until more positive news flow, and that will take time. However, I do suspect that eventually they will be able to provide positive updates on revenue, margin and growth, but I fear that will be later next year. If you are patient then a good opportunity to pick up shares on those bad days :-)

Based on 2019 (pre Covid accounts) Wimps would pay £26.956M cladding tax on their profits. What is not clear, is whether Wimps will still continue to pay for re cladding the properties they built, as they have promised and allocated funds to do this (exceptional taken in accounts), or whether the UK GOV overall fund will take over responsibility. I assume that Wimps will still pay for their own building to be reclassified, and make a contribution of ~ £27m per year to the UK GOV fund.

Rumours that the Chancellor will add a 5% levy on builders taxable profits, to pay for the fire cladding work. Good news is we now know the damage and markets can move on, bad news is markets might think it excessive. We will see.

Ah, I misunderstood. Apologies.

Hmmm, why would you would wait until the divi is paid. The trading update is a day before the divi is paid , and will likely have more impact on the SP. Or, am I missing something.

Like lots of businesses that were paying specials out prior to Covid, Wimps were skating on thin ice. Their cash conversion rate was falling dramatically, and trying to maintain the special was starting to strain their balance sheet. Covid provided an opportunity to reset. This has subsequently been confirmed by the need to launch a rights issue to buy smaller "shovel ready" sites, as they were slightly compromised with a glut of large cash consuming sites.

Anyway, I'm not sure that they will rush to pay a special anywhere near what they have previously paid, and may settle for increasing the normal maintenance dividend by a healthy amount instead, assuming some net asset gymnastics.

Either way, we will see what transpires. I wouldn't count any chickens before they hatch.

I don't have any IMB shares, nor have I ever held any IMB. I have looked at them out of natural curiosity because of their poor performance, with the view of deciding whether the falls were overdone. However, after some basic analysis and research I have to say its hard to find any redeeming evidence as to why I, or anyone should buy IMB. In the interest of balance I was just putting my opinion forward, just as the pro buy IMB posters do.

Bc2020. That was my point. "... investing is for the longer term ..." Just look at at the IMB five chart and calculate actual return (capital loss and income stream from dividends), and you have to be a recent investor (gambler) to have a positive return. Very few will have a positive return.

Just pull up a five year chart for IMB share price, stand back, take a deep breath. Are you sure that you should be risking your capital in IMB, the trend will continue ...

Hi Fred, hope all is well with you. I suspect that the market is worried about logistics, and the ability to get the product onto the shelves. However, I haven't noticed any shortage of Vimto products in UK based outlets. There may be some issues with shipping overseas, due to shortage of containers and excessive pricing thereof. I suspect the market has over reacted, but I guess we will need to wait until the trading update to find out for sure. The CEO buying shares a week or two ago is a good sign though.